Australian Dollar
#1
Original Poster
Join Date: May 2006
Location: GA
Programs: VA-PLT, QF-GLD, DL-GM, UA-ex1K, AA-exPLT, HH-DM, IHG-PLT, MR-GLD
Posts: 8,242
Australian Dollar
Well the Aussie dollar reached parity with the USD less than 2 years after being at 68% of it!
A combination of factors, including a weak USD and a strong AUD are contributing (it's not entirely one sided). It's been hovering around the even mark since. Anyone from either side wish to comment?
I reckon it is good for the US economy but terrible for US Citizens in Australia. I think that it will end up around 0.95 or so and won't go back to previous levels anytime soon....
A combination of factors, including a weak USD and a strong AUD are contributing (it's not entirely one sided). It's been hovering around the even mark since. Anyone from either side wish to comment?
I reckon it is good for the US economy but terrible for US Citizens in Australia. I think that it will end up around 0.95 or so and won't go back to previous levels anytime soon....
#2
Join Date: May 2003
Posts: 1,315
#3
Join Date: Jan 2006
Location: SNA / South OC
Posts: 304
We went to Oz in June 2009 and the AUD was about 70 cents...when I booked a lot of stuff in Feb/March 09 it was about 65 cents! Glad we went when we did.
The Aussie economy is very robust thanks to the major components being raw materials and agriculture and the wisdom to align with Asia 2 decades ago. Just as important, Aussie public sector debt is a small percentage of GDP (I believe less than 10%) while ours is north of 65% and getting worse.
Our Federal Reserve has further eased rates (they are at a 53-year low) while Reserve Bank of Australia recently raised rates...all cogs in the wheel. If any of my comments about Oz financials are off, please correct them!
I think the USD will stay weak....we shipped boatloads of greenbacks to China in trade for flimsy goods. More greenbacks were printed to bail out banks who are sitting on the cash and not too eager to circulate it back into the economy. So our consumer-driven economy will stay stagnant until something thaws. (Aviation content- the 787 is getting cheaper for Qantas as the delays continue).
The Aussie economy is very robust thanks to the major components being raw materials and agriculture and the wisdom to align with Asia 2 decades ago. Just as important, Aussie public sector debt is a small percentage of GDP (I believe less than 10%) while ours is north of 65% and getting worse.
Our Federal Reserve has further eased rates (they are at a 53-year low) while Reserve Bank of Australia recently raised rates...all cogs in the wheel. If any of my comments about Oz financials are off, please correct them!
I think the USD will stay weak....we shipped boatloads of greenbacks to China in trade for flimsy goods. More greenbacks were printed to bail out banks who are sitting on the cash and not too eager to circulate it back into the economy. So our consumer-driven economy will stay stagnant until something thaws. (Aviation content- the 787 is getting cheaper for Qantas as the delays continue).
#4
FlyerTalk Evangelist
Join Date: Feb 2005
Location: RSE
Programs: AA Exp|VA Platinum
Posts: 15,504
The Aussie economy is very robust thanks to the major components being raw materials and agriculture and the wisdom to align with Asia 2 decades ago. Just as important, Aussie public sector debt is a small percentage of GDP (I believe less than 10%) while ours is north of 65% and getting worse.
Our Federal Reserve has further eased rates (they are at a 53-year low) while Reserve Bank of Australia recently raised rates...all cogs in the wheel. If any of my comments about Oz financials are off, please correct them!
Re Australian public debt the government went into the GFC with zero debt (there were government bonds, but these were largely to assist financial markets in pricing assets), debt is expected to peak at about 7% of GDP through the cycle.
#5
FlyerTalk Evangelist
Join Date: Feb 2004
Location: Where I'm at
Programs: UA 1P 1MM, Hyatt Globalist
Posts: 21,738
#6
Original Poster
Join Date: May 2006
Location: GA
Programs: VA-PLT, QF-GLD, DL-GM, UA-ex1K, AA-exPLT, HH-DM, IHG-PLT, MR-GLD
Posts: 8,242
The report that was issued and widely publicized only considered grocery products. Australia is a net importer of grocery products but exports a huge amount of unprocessed food product (wheat, sugar, etc) that was not included in those numbers.
So I don't know how you qualify an aberation, but the current state of parity is more unusual than the long-standing mid 70% range.
#7
Original Member
Join Date: May 1998
Location: Portland OR Double Emerald (QF and AA), DL PM/MM, Starwood Plat
Posts: 19,589
AUD exchange rate is actually surprisingly predictable over the past 40 years, just look back at the historical rates. Quite obvious in retrospect The current outlook is to get to go up another 10% in the next 6 months, so pricing will only get worse for tourists. The tourism sector is starting to hurt, but Sydney hotels are at 90%+ occupancy despite very high rates, so it will take some time before tourism costs will drop.
#8
FlyerTalk Evangelist
Join Date: Feb 2005
Location: RSE
Programs: AA Exp|VA Platinum
Posts: 15,504
Depends on your definition of 'food.' The recent reports of Australia being a net food importer are extremely misleading, and you cannot apply that to 'Agriculture' because Australia is by far a net exporter of agricultural goods.
The report that was issued and widely publicized only considered grocery products. Australia is a net importer of grocery products but exports a huge amount of unprocessed food product (wheat, sugar, etc) that was not included in those numbers.
The report that was issued and widely publicized only considered grocery products. Australia is a net importer of grocery products but exports a huge amount of unprocessed food product (wheat, sugar, etc) that was not included in those numbers.
#9
Original Member
Join Date: May 1998
Location: Portland OR Double Emerald (QF and AA), DL PM/MM, Starwood Plat
Posts: 19,589
One of the most efficient steel mills in the world happens to be in QLD, and now is losing money due to the change in exchange rates (most costs are in AUD and most revenue is in USD). Still a great plant, but now uneconomic. Adding value to iron ore and coal can be tricky. Of course this is when the quality of management becomes supremely important.
#10
Original Poster
Join Date: May 2006
Location: GA
Programs: VA-PLT, QF-GLD, DL-GM, UA-ex1K, AA-exPLT, HH-DM, IHG-PLT, MR-GLD
Posts: 8,242
AUD exchange rate is actually surprisingly predictable over the past 40 years, just look back at the historical rates. Quite obvious in retrospect The current outlook is to get to go up another 10% in the next 6 months, so pricing will only get worse for tourists. The tourism sector is starting to hurt, but Sydney hotels are at 90%+ occupancy despite very high rates, so it will take some time before tourism costs will drop.
However if I look at the current economic conditions I suspect it might gain on the dollar.
So that doesn't seem predictable to me.
I have bought and sold AUD the last three years and made some decent returns but now have cashed out, if you have indicators it would be interesting for me.
#11
Moderator: Asiana & Qantas Frequent Flyer
Join Date: Dec 2006
Location: STR/SYD/SMF
Programs: QF Lifetime SG, LH HON, OZ Lifetime Diamond +, HH Diamond, Marriott Lifetime Platinum
Posts: 14,373
Nothing to do with citizenship. I know many Americans here who are very happy as they are being paid in AUD. And I also know Aussis who are very unhappy as they are working for a big American credit card company and get paid in USD and they are much worse off than 12 months ago.
#12
FlyerTalk Evangelist
Join Date: Feb 2005
Location: RSE
Programs: AA Exp|VA Platinum
Posts: 15,504
A chronic CAD isn't a great thing to have, nor is the fact that we import vast amounts of capital for uneconomic purposes such as property speculation, and putting things on the credit card. If it wasn't for a once in a century mining boom we'd be in the same sinkhole as the rest of the world. Our export base is far too narrow.
#13
Original Poster
Join Date: May 2006
Location: GA
Programs: VA-PLT, QF-GLD, DL-GM, UA-ex1K, AA-exPLT, HH-DM, IHG-PLT, MR-GLD
Posts: 8,242
Nothing to do with citizenship. I know many Americans here who are very happy as they are being paid in AUD. And I also know Aussis who are very unhappy as they are working for a big American credit card company and get paid in USD and they are much worse off than 12 months ago.
#14
Original Member
Join Date: May 1998
Location: Portland OR Double Emerald (QF and AA), DL PM/MM, Starwood Plat
Posts: 19,589
Forex trading in AUD and AUD bonds has been easy money for the last couple of decades......of course the indicators are interesting, but they are hardly free.
#15
Join Date: Jan 2006
Location: OOL Australia
Programs: QFF (Gold), Skywards, Rapid Rewards,United, Velocity, Hilton Silver
Posts: 2,440
AUD exchange rate is actually surprisingly predictable over the past 40 years, just look back at the historical rates. Quite obvious in retrospect The current outlook is to get to go up another 10% in the next 6 months, so pricing will only get worse for tourists. The tourism sector is starting to hurt, but Sydney hotels are at 90%+ occupancy despite very high rates, so it will take some time before tourism costs will drop.